Free Trade, Growth, and Convergence |
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Authors: | Dan Ben-David Michael B. Loewy |
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Affiliation: | (1) Tel Aviv University, Tel Aviv, Israel, 69978;(2) National Bureau of Economic Research, Cambridge, MA 02138, USA;(3) Centre for Economic Policy Research, London, EC1V 7AB, England;(4) University of South Florida, Tampa, FL 33620, USA |
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Abstract: | Can trade liberalization have a permanent affect on output levels, and more important, does it have an impact on steady-state growth rates? The model emphasizes the role that knowledge spillovers emanating from heightened trade can have on income convergence and growth rates during transition and over the long run. Among the results of the model, unilateral liberalization by one country reduces the income gap between the liberalizing country and other, wealthier countries. From the long-run growth perspective, unilateral (and multilateral) liberalization generates a positive impact on the steady-state growth of all the trading countries. |
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Keywords: | growth convergence trade liberalization knowledge diffusion |
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